BT Cellnet aims to double users to 12m by 2003

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The Independent Online
BT CELLNET, the wholly owned mobile arm of British Telecom, yesterday underscored predictions of surging growth for mobiles by forecasting that its customer base would double to 12 million users within three years. It also predicted that two-thirds of Britain's 60 million population will be mobile users by then.

The forecasts were made as BT unveiled a joint venture with EMI Group, the music publisher, to provide real-time music news and song clips through BT Cellnet's Genie Internet service provider.

Beginning in January, Genie will send news to subscribers in text message form. For 5p per minute, customers will be able to call to hear more. Users will be offered breaking news about EMI stars such as Blur or the Spice Girls and hear excerpts of future releases on the EMI and Virgin labels.

The venture follows several new media and online investments made by EMI in recent months. EMI shares closed up 30.5p at 610p, capping a 50 per cent gain in two months.

BT Cellnet's forecasts would imply a small drop in its share of the mobile market to 30 per cent. But analysts expect any market-share reduction to be compensated for by strong revenue growth in information and e-commerce services.

"The core voice business is closing the gap with Vodafone," said Peter Erskine, BT Cellnet's managing director. "And we are leading in the data area, where Genie has 370,000 users." He added that Genie users - expected to reach 600,000 by March - spend more and are less likely to disconnect.

The mobile phones unit expects operating profits to exceed pounds 300m in the year to March 2001, with earnings before interest, tax, depreciation and amortisation (EBITDA) of pounds 600m.

That forecast represents a rapid rise in earnings from current levels. Operating profits for the half to September were pounds 31m, while EBITDA was pounds 145m. BT also forecast that year-to-March 2000 operating profits would be pounds 130m, with EBITDA at pounds 380m.

The fast increase in earnings confirms the feeling of many analysts that BT gained a bargain when it bought the 40 per cent of Cellnet it did not already own from Securicor for pounds 3.2bn in September. BT stock gained 12.5p to 1,427p yesterday.